What will high street banking look like in 10 years’ time? 

Think about the last time you went into a bank branch…What was the reason behind your visit? 

Studies show that people’s need for a physical bank branch is becoming less and less, particularly since the pandemic. Some studies even show that people would simply prefer not to go into a branch, either because they view it largely as an inconvenience to their day, or because they can carry out most of their financial activities online. 

Given the latest consumer trends and how the purpose of a brick-and-mortar bank branch has been shifting over the last few decades, it’s worth envisaging a fresh perspective on high street banking and what weight it carries, both physically and financially on both banks and building societies as we move into a post-pandemic digital era.  

How have bank branches evolved over time? 

Bank branches have been evolving at the pace of technological and social advancement over the last 50 years, so it would be useful to take a trip down memory lane and look at how branches have evolved since they were first introduced. 

The world’s first cash machine landed on a north London high street in 1967. Since then, everyday banking has been transforming for millions of people all over the world. The most significant development in the world of banking was in the late 20th and early 21st centuries with the advent of online banking, which has slowly changed how we view the true purpose of our local bank branches.  

Source: What does a bank branch look like in the future? | Ipsos  

Prior to the pandemic, many visited branches for tasks that could be completed digitally, such as opening accounts and depositing cheques. But the pandemic reinforced the need to maximise efficiency of simple tasks that can be handled digitally and reserve the physical branches and face-to-face customer service for more high-value and complex tasks, such as loan and mortgage advisory.   

Utilising spaces in different ways that are designed to the needs of customers may therefore be a way to repurpose a post-pandemic branch. However, in the last three years, we’ve witnessed a total of 1,221 bank branch closures amongst the leading banks in the UK (UK bank branch closures and scheduled closures 2021 | Statista). Given that demand is hot and cold, what will this mean for bank branches in a post-pandemic era? 

Will the post-pandemic era ultimately lead to fewer branches? 

Potentially, but that won’t see us saying goodbye to branches forever any time soon. Many customers in the UK still prefer to visit a physical branch, particularly for complex products, such as loans and mortgages. We have also witnessed some retail banks reinventing their branches around digital and community-based concepts in the last few years irrespective of the pandemic. For example, 

• Capital One ‘Cafes’ are designed to be welcoming spaces where banking meets living—where everyone can relax, refuel, and unwind, whether they’re Capital One customers or not. 
• Virgin Money ‘Stores’, a place for entrepreneurs to co-work and create, offering free coffee, a venue for events and concerts, a social media studio for content creation, and more. 
• Umpqua Bank ‘Community Hubs’ welcome yoga classes, gathering spots for members of the public to enjoy a free cup of tea or coffee, surf the internet, or stage events such as movie nights. 

Further, the rise of OneBanks Hubs, designed to increase accessibility to people and small business customers to do both their online banking and gain access to customer support services, shows that there is still a place for branches on the high street, particularly in smaller towns and financially-excluded communities. 

The future of banking will be innovative and hybrid  

So now that we’ve established the need for hybrid and innovative solutions, how can we support banks and building societies define what their ‘branch of the future’ will aim to achieve and help them enable a hybrid model? 

As we look ahead at the next phase of the branch of the future, moving on from ATMs and automated depositing machines, it is worth in the very first instance considering whether: 

1. it’s worth the investment for the branch 

2. it’s embedded in targeted consumer research to ensure it’s something that customers truly want; and 

3. looking for points of differentiation and competitive advantage; a new interior design doesn’t necessarily mean more business 

Here are some ideas to help pave the way towards reimaging the high-street and what a post-pandemic branch strategy could entail… 

Becoming partners 

Many small online businesses that were set up during the pandemic don’t own any physical space, which could be hindering them from reaching certain demographics. Partnering with these local businesses as a form of commercial lending, offering them a space in the branch with cheaper rent, even just part-time, would be a win-win. As well as re-enforcing the community concept as a hub to promote small businesses, it simultaneously increases the branches relevance and perception of giving back to the community in local towns and cities. 

Leveraging enhanced technology 

We’ve seen OneBanks that offer everyday banking needs as part of a suppliers’ market. But what about leveraging new and exciting technologies such as iris recognition and fingerprinting for remote activation and security, enhancing biometric authentication of ATM transactions with advanced technologies to elevate the possibilities of physical banking tasks and draw in more consumers.  

Turn branches into stems; splitting up the functions 

We know by now that huge brick and mortar buildings may not be the best place for banks to be offering their services. Splitting up the functions of a branch and dotting these around the town with the highest foot traffic areas such as supermarkets, libraries, gyms, could be a new way to reimagine what functions remain in store. For example, utilising smaller kiosks for cash management activities dotted around local towns and cities, and reserving the more complex transactions, mortgage advice, and loan repayments, for in-branch, could be a new way forward too.  

The takeaway: innovation is key and blanket approaches will fail 

Strategies and models must be developed with sufficient research and be specific to each town or area and the consumers therein.  

Innovation will be the key to survival of branches. As we move deeper into a post-pandemic digital era, new and exciting concepts that we explore for branches must be able to provide seamless omnichannel integration, enable a sense of community, and embrace the human touch in digital.